An Overview of Policy Options for Changing the Tort System

Various scholars and policy advocates have proposed altering the tort liability system to reduce what they see as excessive transaction costs and other problems associated with it. Those proposals are too numerous for all of them to be discussed here. Instead, this chapter examines a number of policy options to illustrate the range of choices available to lawmakers. The chapter outlines each option’s potential implications for efficiency and equity. For reasons of space, however, it cannot analyze any one option in full detail. (For example, it does not consider the effects on state law or the potential transition problems associated with a particular change, nor does it discuss the many possibilities for combining policies that are not mutually exclusive.)

The options discussed here can be grouped according to their general approach. The first approach would greatly reduce the scope of the tort system and rely more heavily on other tools to control the costs of injuries. The second group contains options that are more incremental in nature but that could be applied broadly to the universe of torts. The final set comprises options targeted toward types of tort claims that have raised particular policy concerns, such as claims arising from medical malpractice or asbestos exposure and those litigated as class actions.

In all three groups, most of the proposals can be seen as addressing one or more of the fundamental barriers to efficiency discussed in Chapter 3:

  • The difficulty of giving both potential injurers and potential victims incentives to choose the efficient form and scale of their risk-related activities;
  • The added difficulty of optimally distributing (insuring) the risks that remain after efficient precautions have been taken; and
  • Problems relating to the cost and scarcity of information, including transaction costs, errors in judgments and in settlements, and inefficient standards for due care.

Other options respond to issues that arise from broader aspects of the legal system, such as the perceived problem that some locally elected judges are biased against out-of-state corporate defendants.

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